A model, in vitro phosphorylation/dephosphorylation cascade system was developed in which the two converter enzymes were bovine cardiac cAMP-dependent protein kinase (type II) and phosphoprotein phosphatase (Mr = 38,000). Both enzymes were purified to near homogeneity. The effects of divalent cations, ATP, NaF, and phosphatase inhibitor-2 on the phosphatase were examined. The kinetic parameters for both converterenzymes were determined using the nanopeptide, leu-arg-arg-ala-ser-val-ala-gln-leu as the substrate, cAMP as an activator for the kinase, and Pi as an inhibitor for the phosphatase. The in vitro cascade was studied at different enzyme substrate and effector levels. In the presence of a constant ATP concentration, a steady-state level of phosphorylation of the nanopeptide is attained. The extent of this fractional modification is modulated by the relative concentrations of the kinase, phosphatase, and effectors. The model cascade exhibits both signal amplification and an increase in sensitivity to variations in effector concentrations. In addition, the results demonstrate that when the concentration of the enzyme-substrate complex is not neglibible, as is often found in vivo, the cyclic cascade is potentially more sensitive to variations in effector concentration than predicted previously using simplified equations.